LONDON, Feb 22 (Reuters) - British wealth manager Rathbone Brothers posted a 17.6 percent rise in full-year pretax profit on Thursday, buoyed by strong markets and net inflows of new client money combining to push total assets to a record high.

Assets under management during the period were 39.1 billion pounds ($54 billion), as previously announced, up 14.3 percent from the prior year and just shy of a five-year target to reach 40 billion pounds by the end of 2018.

That helped pretax profit rise to 58.9 million pounds in the year to end-December, up from 50.1 million pounds in the prior-year period. Rathbones said in a statement that the board had recommended a final dividend of 39 pence.

As the broader industry continues to consolidate amid rising costs and pressure on fees, Rathbones reported an improved underlying profit margin of 30.6 percent from 29.8 percent and said it was looking for deals after a possible merger with British peer Smith & Williamson foundered in 2017.

“We enter 2018 in a good position, with industry-leading operating margins and a strong balance sheet. We will continue to look for accretive acquisition opportunities and to invest in our future with discipline,” Chief Executive Philip Howell said.

The rise in assets was driven by annual growth of 3.9 percent at its investment management unit and a rise in unit trust assets to 5.3 billion pounds from 4 billion pounds.

Calling the results “broadly in-line”, KBW analyst Jonathan Richards said he maintained a ‘Market Perform’ rating on the stock with a 2,400 pence target price.